An umbrella body of financial sector regulators has given the go-ahead for Saccos to lend money to each other through a Central Liquidity Facility (CLF). This is the first step towards Saccos joining the national payments system in their own right, a move that could see commercial banks lose third-party businesses.
Under the new regime, Saccos will run their own inter-Sacco market where they can lend and borrow from each other at reasonable rates to offset their financial positions.
The CLF would give Saccos an equivalent of the clearing house run by the Kenya Bankers’ Association, which nets off obligations between banks both in the interbank market and in clearing of cheques.
Commercial banks could lose close to Ksh19 billion worth of loans that are currently granted to Saccos at inflated rates every year.
The move is expected to be announced by Treasury Cabinet Secretary Henry Rotich in a few weeks when he reads the national budget.
The CLF would empower Saccos to issue their own cheques to their members unlike now when they are restricted to processing bankers’ cheques on behalf of banks on a revenue-sharing basis, which is heavily slanted in favour of banks.
CLF would also obviate the need for Saccos to get lines of credit from commercial banks at high interest rates that cannot be supported by the regulated terms on which Saccos lend to their members.
The move is part of efforts by the regulators to help Saccos manage cash constraints that have arisen following the introduction of new prudential guidelines for Deposit Taking Saccos (DTSs).
This is besides the loss of commissions on transactions executed by commercial banks on behalf of Saccos including issuing of cheque books, processing of personal cheques issued to Sacco members, Real Time Gross Settlement (RTGS) and Electronic Funds Transfers (EFTs) services where some banks demand as much as 70 per cent of the commission.
Sacco Societies Regulatory Authority (Sasra) — has already commissioned an American consultant firm, Dave Grace & Associates, to carry out a feasibility study on the operability of the CLF in the Kenyan market.